Indiaâ€™s influence wanes on world stage

The ghosts of 1965 and 1991 are back. A weak economy has eroded our global stature.

April 10, 2013:
Nations lose international influence and power when they are either militarily unprepared or floundering economically. We are still to recover psychologically from the humiliating military defeat inflicted by China in 1962.

THENâ€¦

The 1962 conflict led to an adventurist Field Marshal Ayub Khan seeking to seize Kashmir and failing to do so, in a largely inconclusive conflict in 1965. This conflict had disastrous diplomatic consequences, with the once-friendly Soviet Union seeking the role of a mediator, while readying to supply weapons to Pakistan.

India became a basket case, dependent on the Soviet Union for arms and on the US for IMF assistance, to deal with a balance of payments crisis. With begging bowl in hand, India sought American food aid, as chronic food shortages led people to the verge of starvation.

Things turned for the better when Indian agriculture revived, through a â€œGreen Revolutionâ€ spearheaded by then Agriculture Minister C. Subramaniam. The Soviet Union came out in support of an economically self-reliant, rhetorically Left-leaning Indian Government.

The dark shadows of 1962 receded when, backed by the Soviet Union, India emerged victorious, while pitted against a Nixon-Mao-Yahya Khan Axis, in the 1971 Bangladesh conflict. By the early 1990s, however, the Soviet Union collapsed and we had to mortgage our gold reserves to stay afloat.

A malevolent Clinton Administration was prepared to go to any length in pressurising the Russian Federation to end cooperation even in space with India, in a relentless effort to â€œcap, roll back and eliminate,â€ Indiaâ€™s nuclear weapons programme. Our prestige sank so low that we were humiliated in an ill-advised contest against Japan for a seat in the UN Security Council in 1997.

It was only when the economic reforms and liberalisation initiated by Prime Minister P. V. Narasimha Rao took effect that Indiaâ€™s economy recovered, for India to withstand global economic sanctions, which the country faced after the nuclear tests of 1998.

A chastened Bill Clinton visited India once he realised that it was pointless to sanction an economically vibrant country. The NDA Government under A. B. Vajpayee observed the fiscal prudence required to not let runaway inflation set in.

The UPA-1 built on all these developments. Global nuclear apartheid against India ended, with India assuming a larger global profile by its participation in forums like G-8, G-20 and BRICS.

â€¦AND NOW

But, the UPA political dispensation still remains wedded to populism and fiscal irresponsibility. Few remember that the economic disaster in 1991 followed a populist loan waiver for farmers by then Prime Minister V.P. Singh.

Now, fiscal deficit has crossed 5 per cent of GDP, and growth is down to 5 per cent levels. A populist Environment Minister brought in regulations destined to inordinately delay project clearances. New investments are becoming scarce, as Indian entrepreneurs seek greener pastures abroad. Every rating agency, foreign investor and foreign government knows that India has become a difficult investment destination.

BRICS FARCE

It is now commonly mentioned that BRICS would be better served if India is replaced by Indonesia, where economic management is prudent and sound.

The current joke is that while corruption is present everywhere in emerging markets, one sees â€œefficient corruptionâ€ in China, but â€œinefficient corruptionâ€ in India!

With the current account deficit at 6.7 per cent of GDP in Q3 of 2012-13, it was ludicrous for New Delhi to be advocating a BRICS Investment Bank. India will be a relatively minor player, given Chinaâ€™s vast reserves and potential. This at a time, when observers believe that we may have to seek a bailout from the Western dominated IMF, whose influence the BRICS Bank is designed to erode.

Reports from Durban that South Africaâ€™s President Jacob Zuma did not bother to meet our Prime Minister, and was busy feting President Xi Jinping and President Putin, are disturbing. Moreover, while other Heads of Government were housed comfortably in Durban, Manmohan Singh was made to stay 40 kilometres away from the Conference venue. Indian prestige and credibility today are at its lowest in recent years.

In Maldives, we have been out-manoeuvred by a wily President Waheed, who skilfully bought insurance from China and Pakistan. On Sri Lanka, we have vacillated in the UNHRC.

In the process, we have gratuitously offended a friendly neighbour and not persuaded public opinion in Tamil Nadu of the merits of our stand.